Factors That Help Determine Your Mortgage Rate

 The lower the interest rate, the more you can spend on a new home but 2023 is seeing a rise in the rates. If you are in the market for a new home, you want to lock in the lowest rate possible. Trusted lenders are a great resource to have when it comes to your mortgage rate. Here are four things that will help determine your mortgage rate.

Your Credit Score

“When you build and maintain strong credit, mortgage lenders have greater confidence when qualifying you for a mortgage because they see that you’ve paid back your loans as agreed and used your credit wisely. Strong credit also means your lender is more apt to approve you for a mortgage that has more favorable terms and a lower interest rate,” explains Freddie Mac.

A better credit score leads to a lower mortgage rate so you want to make sure you keep a good credit score. If your score needs improving, a lender can help with advice on how to best do this so that when it comes time to get approved, you will get the best rate.

Your Loan Type

“There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose,” comments Consumer Financial Protection Bureau.

Keep in mind that there are several types of loans and each loan will offer different terms for each qualified buyer. When looking into a loan, contact your local real estate advisor who can tell you what is available in your specific area and which types of loans it looks like you would qualify for.

Your Loan Term

Just like a loan type, there are also different loan terms that are available. These can all be different according to your situation and the life of your loan.

“When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan,” according to Freddie Mac.

Your Down Payment

“In general, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have a more stake in the property. So if you can comfortably put 20 percent or more down, do it – you’ll usually get a lower interest rate,” explains the Consumer Financial Protection Bureau.

If you are a homeowner and want to move, you can use the equity from the sale of your home as the down payment. A lender can help you determine the difference if you put a higher down payment down up front.

These are several factors that are looked at and will help with how much your mortgage rate will be. If you are searching for a home, go ahead and find a local sales agent and a local lender who can help you through the process.

Click Here For the Source of the Information.

Homes Sales Are Rising But Still Below Pre-Pandemic Years

 There are many challenges when it comes to selling and buying a home, but today’s market is seeing a setback if you are a buyer. The reason for this is that there are so few homes on the market with too many potential buyers that are interested. If you are thinking about selling your home, now is the perfect opportunity.

“There are 65.5% more homes for sale in January compared to the same time in 2022. This means that there were 248,000 more homes available to buy this past month compared to one year ago. While the number of homes for sale is increasing, it is still 43.2% lower than it was before the pandemic in 2017 to 2019. This means that there are still fewer homes available to buy ona typical day than there were a few years ago,” according to Realtor.com‘s Monthly Housing Market Trends Report.

Active monthly listing counts for the last six Januarys show a big increase between 2022 and 2023. There is still a lag between what was reported in January 2018 versus what was reported this January so the market has not caught up to prepandmic levels. January 2018 listings were up to 1,042,660 on a monthly basis, in January 2019 they slightly increased to 109,507, January 2020 saw a drop to 953,045, January 2021 came in at 532,603, January 2022 decreased to 378,189 and jumped in January 2023 to 625,875.

If you are a potential seller, this is great news. Buyers have been frustrated with the low inventory and many gave up altogether. This has changed this spring due to the lowered interest rates, buyers are coming back to the market. “Home buyers are edging back into the market after being sidelined last year….,” reports the New York Times.

If you are thinking about selling your home, now is the time! Choose a local realtor who can help you with the sale of your home. A local agent knows the area and will help you get the best price from a trusted buyer.

Click Here For the Source of the Information.

Tips For First-Time Home Buyers

 Buying a home is one of the most exciting adventures, however it can be both exciting and stressful especially for first-time home buyers. Here are several tips to follow when you are looking to purchase a home.

Don’t buy a home primarily as an investment

Even though home prices are on the rise, this will not always be the case. If you are looking for a financial return, you might want to stick with the stock market. Owning a home should be more of a personal investment than a financial one. If you are unsure of your job location in the next five years, then owning a home might not be in your best interest right now. Remember, you need to own your home for more than five years to really see a good return on investment.

Know what you can afford

There are tons of mortgage calculators that can help you determine how much of a home you can afford. The amount you are able to borrow depends on many factors, especially on your monthly income and your other financial obligations. In general, your housing costs should not be over 31% of your gross monthly income.

Check your credit score

A good credit score means a good mortgage rate. If you have a high credit score, then you will qualify for a lower mortgage rate. Before you start the home buying process, check your credit report to see if you need to improve your credit before purchasing a home. Remember, paying your bills on time and keeping a low credit card balance can help improve your score.

Understand the other costs involved

There are more costs involved than just the monthly mortgage payment. You will also be responsible for property taxes and homeowner’s insurance. Other costs will include your closing costs, home inspection and some communities have HOA fees. These can be a lot when added onto your monthly expenses.

Plan to put down at least 20%

The rule of thumb is usually a lender will want you to put down 20% of the home’s purchase price. If it is any less, you will be charged PMI (private mortgage insurance). You will have to keep paying PMI until your loan-to-value reaches 80%. Also, if you put down a bigger down payment, it means you are a serious buyer who wants to win the bidding war.

Know what documents you will need for your loans

When you are ready to get approved for a loan, you will need certain documents for the lenders. These include the sales contract, financial statements, pay stubs, previous W2s, IRS forms and homeowner’s insurance policies.

Once you have these documents you are ready to get pre-approved for a loan. Getting a pre-approval lets others know that you are a serious buyer. If you are considering purchasing a home, hire a local real estate agent that can help you with the home buying and lending process.

Click Here For the Source of the Information.